>> CATHY: SWEEPING CHANGES TO FEDERAL HEALTHCARE POLICY TAKE EFFECT NEXT YEAR AS PART OF HR1, OR THE ONE BIG BEAUTIFUL BILL ACT.

MANY SAY IT’S CAUSING A RISE IN THE NUMBER OF HEALTHCARE MERGERS BEING PROPOSED, INCLUDING SEVERAL HERE IN MINNESOTA JUST THIS YEAR.

REPORTER KAOMI LEE LOOKS AT THE LATEST BETWEEN HEALTH PARTNERS AND ESSENTIA.

>> IT IS UPSETTING THAT IT IS THAT WAY.

>> Kaomi: SOME THINGS NEVER CHANGE, LIKE OLD FRIENDSHIPS BETWEEN BOB MARONE AND JERRY OSBERG, THEY'VE KNOWN EACH OTHER FOR 60 YEARS AND STILL MEET UP REGULARLY IN ELK RIVER.

>> EVERY WEEK, EVERY THURSDAY AT THE OLD MAIN.

>> BUT THER THINGS DO CHANGE.

THE MEN ARE LEARNING ABOUT FEDERAL CHANGES TO THEIR HEALTHCARE PLANS.

>> EVERYTHING ALWAYS SEEMS TO COME DOWN TO MONEY.

>> IT DOES.

IT'S THE ALMIGHTY DOLLAR.

>> THE CARE FOR THE PEOPLE, IT SEEMS TO GET MORE LACKLUSTER.

>> Kaomi: WHERE THEY GET THEIR HEALTHCARE MIGHT CHANGE, TOO.

LAST MONTH NORTH MEMORIAL HEALTH MERGED WITH SANFORD HEALTH OF SOUTH DAKOTA.

CALIFORNIA-BASED SUTTER HEALTH HAS ANNOUNCED PLANS TO BUY ALLINA HEALTH.

>> MERGERS, I DON'T CARE IF IT'S IN THE HEALTH INDUSTRY, THE CONSTRUCTION INDUSTRY, BLAH BLAH BLAH, BIG SWALLOW UP LITTLE.

>> Kaomi: AND NOW A THIRD MERGER HAS JUST BEEN ANNOUNCED.

>> WHEN WE LOOK TOWARDS THE FUTURE, THE QUESTION WAS, HEALTHCARE NEEDS O CHANGE.

AND WE THEY'D TO CHANGE WITH IT.

>> aomi: A COMBINED $12.5 BILLION SYSTEM.

WE SPOKE TO CEO DAVID HERMAN AT THE MAJOR SYSTEM'S PREMIER HOSPITAL, COMPLETE WITH VIEWS LIKE THIS OF LAKE SUPERIOR.

>> THERE'S A LOT OF AI THAT'S COMING INTO HEALTHCARE, PERHAPS NOT SO MUCH FROM THE DELIVERY SIDE RIGHT NOW AS WE WOULD LIKE, BUT FROM THE ADMINISTRATIVE SIDE, THAT REQUIRES INVESTMENT.

CHANGES IN THE EHR TO BE ABLE TO DO THAT, THAT REQUIRES INVESTMENTS.

WORKFORCE, WORKFORCE IS CHALLENGE FOR US, UP HERE PARTICULARLY IN RURAL CLINICS.

>> Kaomi: ESSENTIA HAS CLINICS IN NORTHERN MINNESOTA, EASTERN NORTH DAKOTA, AND NORTHERN WISCONSIN.

HEALTHPARTNERS IS THREE TIMES LARGER AND CENTERED IN THE TWIN CITIES, CENTRAL MINNESOTA AND WESTERN WISCONSIN.

IT ALSO HAS AN INSURANCE BUSINESS LOOKING FOR MORE CUSTOMERS.

THE COMBINED SYSTEM WOULD HAVE NEARLY TWO DOZEN REGIONAL HOSPITALS.

>> TO GIVE GREATER ACCESS TO CARE, GREATER AFFORDABILITY TO CARE, I THINK THE OPPORTUNITIES THAT DELIVERING CARE IN RURAL SETTINGS OFFER US RIGHT NOW IS SOMETHING THAT DOVETAILS WITH SOME OF THE CHALLENGES THAT WE'RE FACING FROM A FINANCIAL PERSPECTIVE.

>> Kaomi: FINANCIAL HEADWINDS ARE BREWING, INVESTMENTS IN AI AND TELEHEALTH ARE COSTLY, HEALTHPARTNERS LOST 1% OF ITS REVENUE LAST YEAR.

FEDERAL REIMBURSEMENT CUTS IN MEDICARE AND MEDICAID TAKE EFFECT NEXT YEAR.

BOTH SYSTEMS INSIST IT'S NOT AN ACQUISITION.

>> I THINK THEY BOTH NEED EACH OTHER.

>> Kaomi: INDEPENDENT HEALTHCARE ANALYST ALAN BAUMGART TEN SAYS HEALTHCARE SYSTEMS LIKE HEALTHPARTNERS AND ESSENTIA ARE TRYING TO GET LARGE TOWER RIDE OUT THE STORM.

>> IT'S PARTLY IN RESPONSE TO THE ALLINA/SUTTER DEAL, THAT IT'S A VERY COMPETITIVE MOVE AS VIEWED BY HEALTHPARTNERS THAT THIS LARGE ALIFORNIA SYSTEM IS NOW CHALLENGING IT IN ITS CORE MARKETS.

>> THESE SYSTEMS SAY MERGERS CAN RESULT IN EFFICIENCIES AND OPPORTUNITIES.

ACROSS ARKETSHIP EXPANDS THE BASE.

>> IN AN ENVIRONMENT LIKE MINNESOTA, HERE THE POPULATION'S GROWING SLOWLY SLOWLY, WHERE THE DEMAND HEALTHCARE IS GROWING SLOWLY, IF AT ALL, EOPLE ARE VERY CONCERNED ABOUT MAINTAINING AND, IF POSSIBLE, GROWING THEIR MARKET SHARE AND WORRIED THAT IF THEY DON'T, BY GROWING, THEY'LL BE LEFT BEHIND.

>> Kaomi: HE SAYS MERGERS WITHIN THE SAME MARKET RARELY RESULT IN COST SAVINGS TO CONSUMERS.

EFFICIENCIES INCREASE PROFITS, NOT PATIENT DISCOUNTS.

HEALTHCARE ACQUISITIONS AND MERGERS HAVE BECOME MORE COMMON THESE DAYS, AND THAT HAS THE STATE'S NURSES UNION CONCERNED.

>> FIRST AND FOREMOST IS ACCESS AND QUALITY OF CARE FOR OUR PATIENTS AND COST OF CARE.

AND THEN, SECONDLY, IS PROTECTION FOR THE WORKERS ON THE INSIDE OF THE BUILDING.

>> Kaomi: CHRIS RUBISH IS PRESIDENT OF THE MINNESOTA NURSES ASSOCIATION AND AN RN AT ESSENTIA HEALTH St.

MARY'S IN DULUTH.

BOTH SYSTEMS HAVE SAID HERE WON'T BE ANY CLOSURES AS A RESULT OF THE MERGER.

>> WE'RE SEEING THAT WITH A LOT OF SYSTEMS, INCLUDING ESSENTIA, YOU KNOW, CLOSING OR REDISTRIBUTING RURAL SERVICES AND DIRECTING PATIENTS FURTHER AND FURTHER AWAY TO LEVEL ONE TRAUMA CENTERS, LIKE HERE IN DULUTH.

AND I THINK THAT'S A CONCERN.

A LOT OF RESIDENTS IN MINNESOTA, NORTHERN WISCONSIN, THE DAKOTAS LIVE IN RURAL COMMUNITIES.

AND FOR A LOT OF PATIENTS VIRTUAL ACCESS TO CARE IS NOT THE SAME.

KAYE SCRUTINY OVER THE MERGER HAS REACHED THE CAPITOL.

IT STILL REQUIRES THE APPROVAL OF ATTORNEY GENERAL KEITH ELLISON WHO HAS TAKEN IT UNDER REVIEW.

IF GREEN LIT, THE MERGER WOULD TAKE EFFECT IN JANUARY.

ANALYST BOMB GARTER SAYS THE RECENT SANFORD NORTH MEMORIAL DEAL CAN ACT AS A BLUEPRINT.

>> I LOOK AT THAT AS A MODEL THAT THE KIND OF SCRUTINY THAT THE ESSENTIA HEALTH PARTNERS DEAL WILL GET AND WHAT THE LIKELY OUTCOME IS IN TERMS OF WHAT KIND OF REQUIREMENTS THE ATTORNEY GENERAL WILL IMPOSE IN ORDER TO GET HIS APPROVAL.

>> IT'S SOMETHING THESE FRIENDS IN ELK RIVER WILL BE WATCHING.

>> WOULD THINK IF YOU MERGE THAT YOU COULD ALL PUT YOUR EGGS IN ONE BASKET AND MAYBE THINGS WOULD COME DOWN.

NO, WHAT I'VE BEEN HEARIN' ON THE TV IS HEALTHCARE'S GOING TO GO UP EVEN MORE.

IT ALWAYS GOES UP.

NOTH